`Tips For Scoring A Personal Loan

`Tips For Scoring A Personal Loan


Do you need quick cash to deal with an emergency, consolidate your debt, or invest in a business? If so, consider applying for a personal loan. A personal loan lets you obtain a lump sum from financial institutions like credit unions, banks, and online lenders and use the money as you need to.

In New Zealand (NZ), people can take out a loan for as much as $100,000 for personal use, with an interest rate between 7.05% – 9.95% per annum. But the amount may vary depending on their debt obligations and income.

However, if you have never taken out a loan before, it could be tricky to know where to start. Here’s what you need to know:

  • Stay on top of the documentation 

When you apply for a personal loan, lenders will not entertain your application without sufficient evidence of your identity and financial stability. Typically, New Zealanders must submit proof of identity and address, such as an ID card or driver’s license, and proof of income, such as salary slips or bank statements. 

Self-employed people in New Zealand need to demonstrate that they receive consistent revenue. You can do this by providing the lender with your business registration certificate, balance sheet, and profit and loss account for the past year. It’s a good idea to check the lender’s website to see what documents they require before you start your application. 

It bears worth mentioning that some lenders in NZ take more time than others to verify documents. Therefore, if you need money urgently, contact a lender with a faster loan application approval rate. In fact, fast personal loans in NZ are among the top financial products in the country, with approval rates between 1-7 business days. This is faster than other countries, including The US and UK.

  • Maintain your credit score 

Your credit score is one of the most important factors lenders consider when deciding whether or not to approve your loan application. A high credit score can increase your chances of getting a loan with the desired interest rate. On the other hand, if you have a low credit score, based banks and lenders in NZ will hesitate to extend credit to you because a low score signals a poor payback history. So, check your credit score and take steps to improve it before applying for a loan. 

If you want to improve your credit score, here’s what you should do:

  • Pay your bills on time
  • Keep your credit card balances low
  • Do not close old credit card accounts, even if you are not actively using them
  • Keep your credit utilization ratio under 30%
  • Dispute any errors or inaccuracies you find on your credit report
  • Do not open too many new credit accounts at once

Remember, the credit score does not improve overnight. Therefore, being patient and consistent in your efforts is the key.

  • Get a co-signer 

A co-signer agrees to take responsibility for the loan if you can’t repay the loan. It could be a family member, friend, or even a trusted colleague. The co-signer should have a good credit history and a stable income to help support your loan application. Having a co-signer gives lenders the guarantee that they’ll get their money back.

Before you ask Uncle Bob or your best friend from college to co-sign on your loan, ensure you do your homework. Obtaining a personal loan is a major financial decision. So you must be both on the same page before moving further. Have an open and honest conversation about the purpose of the loan, the amount being borrowed, and the repayment terms. Ensure your co-signer understands the risks and responsibilities of their involvement. 

  • Maintain a good bank balance 

Lenders in New Zealand (and anywhere in the world, in general) like candidates with a good repayment capacity, and one way they measure that is by looking at your average monthly balance. Here is how it works: your bank calculates your average monthly balance by adding up the closing balance of each day in a month and dividing it by the number of days in that month. So if you have been maintaining a healthy balance in your account over time, it shows that you are responsible with your finances and can repay a personal loan. 

Apart from showing your repayment capacity, retaining a substantial amount in your bank account also establishes a solid relationship with your bank. Lenders usually trust customers who have been with them for a while. As a result, you might even get additional perks like higher loan amounts and lower interest rates. 

  • Do not submit multiple applications 

New Zealanders believe that submitting numerous loan applications to different financial institutions will improve their odds of being approved for a personal loan. But, in reality, doing so may hurt your chances of getting your application approved. 

When you apply for multiple loans, lenders may consider you a risky borrower. They get the impression that you’re in a tight spot and are trying to get as much credit as possible to stay afloat. As a result, they may decide not to offer you a loan, even if you’re otherwise qualified. 

Furthermore, the lender will perform a hard inquiry on your credit report whenever you apply for a loan. This will lower your score by a few points. To avoid these pitfalls, research personal loan lenders in NZ carefully and only apply to one or two at a time. Be sure you meet the lender’s eligibility criteria before applying, and consider pre-qualifying first to get an idea of your chances of approval without affecting your credit score. 


Getting a personal loan while living in New Zealand may seem overwhelming, but with the right strategy, it’s pretty straightforward. Follow the tips mentioned above to the T to increase your chances of success. Consulting someone who has successfully taken out a personal loan before will be helpful.